Minimum Wage not signed into law…

The long journey for South Africa’s first minimum wage fix has been tabled in the National Assembly with the Basic Conditions of Employment Amendment (BCEA) Bill and the National Minimum Wage Bill (NMW) Bill having passed second reading stage and having been voted upon.

But all is not well with in the drafting of this Bill by the Department of Labour (DOL) and further reports on union reactions are to be posted in due course. This site is archival.

These two Bills, voted upon and approved by both the National Assembly and the NCOP, four months before the agreed minimum wage to be implemented by law with a deadline of May 2018 set by President Ramaphosa in his State of Nation Address, have therefore not yet been signed by him.

Terminology all wrong

This is because nobody present at the Portfolio Committee of Labour meetings seems to have know what was agreed at earlier NEDLAC meetings. Both Bills were tabled by the Minister of Labour, Mildred Oliphant. In the case of the NMW Bill, the proposal tabled specifies that the national minimum wage will be obligatory for all employees and cannot be varied by contract, collective agreement or law, except by a law amending the anchor Act itself.

Cabinet’s approval of a national minimum wage followed consultations and agreements with business‚ labour and community formations within NEDLAC to allow for the introduction of a national minimum wage. Some low-income employees such as farm workers and domestic workers are to be exempted at a lesser sum and subject to further talks.

Final story

This approval is also translated across into the tandem NMW Bill, a much shorter 14-page Bill, states as item one that the national minimum wage for employees is R20 for each ordinary hour worked but then states as item two that despite this, farm workers are to be entitled to a minimum wage of R18 per hour and domestic workers to R15 per hour. Both anchor Bills can be amended based on annual negotiations.

The BCE Act describes a farm worker simply as “a worker who is employed mainly or wholly in connection with farming or forestry activities” and describes a domestic worker not only as being a worker employed in a home but also “a gardener; a person employed by a household as a driver of a motor vehicle; a person who takes care of children, the aged, the sick, the frail or the disabled; and domestic workers employed or supplied by employment services.”

New boss

The tabling of these two Bills was ratcheted up when Deputy President Cyril Ramaphosa referred to them in one of his first candid speeches unencumbered by political restraint, when he said, “The minimum wage, which translates to R3,500 per month, will be based on a 40-hour week and R3,900 for a 45-hour week. Whilst not being a living wage in his estimation, it represented a start to the upliftment of 6.6 million workers in the country who earn below R3,500, he said.

The secret to acceptance for any number of reasons will not be as a result of parliamentary hearings in this case but an assessed view of how acceptance plays out at provincial level, now in process. Workshops are now touring the country organised by DOL attempting not only the easier task of informing city dwellers but also attempting to outreach to more distant areas such as farming communities.

Outreach

In democratic terms it has been decided that the final stages of the Bill must reflect how the people feel. Provincial briefing sessions on the subject of a minimum wage started 9 November 2017 and commenced in Johannesburg, Pretoria, Cape Town, George, Pietermaritzburg, Richards Bay, Durban, Tzaneen, and Polokwane.

The balance of meetings is to be completed after Parliament has opened Port Elizabeth, Upington and culminating in Kimberley. The balance of all provincial will be assessed by MPs and Parliament will proceed based on input. Feedback is filtering through that the description of workers leaves a number of casual categories holding the short straw in terms of definitions. Our current report with clients amplifies the outrage.

How they see it

The proposed changes to the BCE Act also make provision for the introduction of a new section dealing with guaranteed minimum hours of work. This section provides that an employee, who works for less than four hours on any day will be entitled to be paid for four hours of work if circumstances beyond the control of the employee prevent work from being performed.

Reactions of unions to the term of “employee” being used throughout in the Minimum Wage Bill is now being played out and the “fall out” from the misrepresentation is referred to in reports still with clients.

Seven issues spooking investment…….

editorial……Nothing, absolutely nothing, will stop growth more effectively than to be constantly changing the investment climate by altering the playing field levels; criminalising business for non-compliance of local laws which have nothing to do with business; and bringing about the kind of atmosphere of uncertainty in which investors are constantly attempting to establish current government policy and the reasons for any changes.

Not to understand the reasons is sometimes worse than disagreeing with them. At least if one dislikes an idea one can usually work around the issue. As long as you know its constant its good for investment.

What we know

At parliamentary portfolio committee level, the issue of transformation has been accepted by all as necessary. All are agreed that apartheid was a terrible thing. Most realize that taxes will, without doubt go up, such as carbon tax and probably VAT, as will the cost of living. Most are agreed that service delivery in respect of the ideals of the NDP, especially at local level, is pretty poor.

Also, most agree that just before any kind of election, parliamentarians say some pretty odd things and make totally impractical promises in order to get votes. Look at the USA. However, in rating agency terms of where we stand in South Africa most of these issues have been “discounted”, to use their term.

What we need to know

However, in Parliament, cabinet statements, budget vote speeches and government departmental briefings are important to study in terms of trying to establish some measure of understanding as to where government is headed. The aim is always to establish certainty, not give views.

With certainty in the offing, capital investment can be planned for and growth expected. A clearer picture of government policy is always necessary for the greenhouse of ideas in planned expansion and development; whether the plans are worth the risk to exploit and, furthermore, to create an environment where the international message goes out…… this is the place to invest.

What we don’t know

So what is troubling investors? Aside from the nonsense going on at the SABC, here’s a few ideas and we are sure there are more….

Seven good reasons for a start:

1. What is the real plan of execution behind the Expropriation Bill? Definitions ranging from “the basis of land reform”; queries on the definition on “the public interest”; and a determination, it appears, not to study the constitutional aspects; all these queries and worries contribute to uncertainty.

2. Imagine what happened to planning departments in the mining industry during the last eight months with Minister Zwane’s surprise contributions to BEE shareholder arrangements and also by stating he was turning charters into law, presumably as part of MPRDA legislation. Uncertainty reigned.

3. It’s not good to hear that the BEE pointing system is to change yet again under the Preferential Procurement Act in major sectors that contribute to growth. One understands that President Zuma warned of this in SONA but how many more changes are to come but how many more times will DTI refine their idealogical BEE process?

4. When are intellectual property uncertainties to end? Where is the new legislation? Planning for the internationals in the pharmaceutical industry can hardly be easy.

5. New climate change fuel specifications are upon us and the Minister of Energy is totally uncertain on this issue, as she is with gas exploration, shale gas, a state refinery and the energy mix generally. Many potential investors have given up the waiting around and have gone, whether the oil price drop was to blame or not.

6. Minimum wage legislation will eventually arrive as far as the human resources environment is concerned but labour law as a whole is in flux with new drafts still with NEDLAC. South Africa is now rated one of the worst countries for an uncertain labour climate.

7. The national health insurance scheme coming from the likes of Minister Aaron Motsoaledi is foggy, unsettling to the financial world and confusing to medical health providers. Issuing White Papers is fine but turning these into legislation requires a finely tuned plan and policy directive. One never knows what the good doctor is to say next.

Cabinet cohesion

A lot of the problems come either from Ministers with little interest in the investment climate and who are probably not up the demands of their portfolio, or who appear to have “hobby horses” of their own. In addition, the friction between National Treasury and the Cabinet, so evident in Parliament, is adding fuel to the fire in terms of financial uncertainty.

A good orchestra always needs a good conductor with the ability of bringing people together accompanied by legislative certainty providing the musical score. South Africa badly needs a leader who can do this.

In parliamentary terms, most will be more relaxed when the current local elections are over; Parliament can restart and pressure then applied again to get clarity on exactly what investors can and should expect.

Labour committee to get consolidated report…..

In the light of the fact that any legislation to be considered on the subject of a national minimum wage would involve all undertakings on a national basis and a major cross section of its citizenry, Lumka Yengeni, chairperson of the parliamentary portfolio committee on labour, finalised the provincial stage of her hearings. Localised hearings were held in the Northern provinces last year and now in the balance of provinces after Parliament re-assembled.

The reason for this laborious process is that any such labour legislation would come under section 76 of the Constitution, which demands that debate and approval is not only at national level within the National Assembly (NA) but also with the concurrence of the relevant select committee of the National Council of Provinces (NCOP).

Hearing the people……

Such legislation has to have the approval of each of the nine provincial legislatures and such mandates are passed back to the NCOP and have to be found in tandem with any NA approval. Yengeni is therefore sounding out the market place, as it were, for the idea of a national minimum wage

Whether it would require a separate Bill or an amendment to the LRA is a premature thought at this stage, probably the former in the light that it would need another commission, another departmental structure, probably a tribunal, enforceable laws with penalties and very specific regulations.

ANC seems set on changes

BUSA, Chamber of Mines, labour brokers, Agri-SA and others have already made submissions on a national basis before Parliament closed and the extraordinary thing was that a parliamentary committee should have taken upon itself to debate the whole issue just before meetings on the same subject scheduled by Deputy President, Cyril Ramaphosa.

Nevertheless, Agri-SA, in responding from one of the most problematic perspectives, told parliamentarians that a minimum wage set at a higher level than at present as part of a national application would result in a “considerable number of structural changes within the farming industry to accommodate what would undoubtedly be a call for higher wages in many spheres at many different levels of training and expertise.”

They warned that “to adjust and maintain their competitiveness and profitability” such a policy would be characterised by the shedding of jobs, increased mechanisation and the consolidation of farming units” – as had happened in the past they said.

FAWU zeroes in on agric

Food and Allied Workers Union said that any comparison to the minimum wage in nearby countries “was an insult” and said that that South African farmers on the whole were paying “poverty wages”. The cost of food to poorer families became a major debating area during the hearings, although there seemed to be tacit acceptance that the issue was to become an accepted fact on the labour horizon.

During the hearings recently in Gauteng, COSATU now seems to be suggesting remuneration somewhere in the area of R7,000 per month, submissions also coming from major industrial players in South Africa’s heavy industry sector. COSATU comments after the hearings where finally completed and in interview seemed to come “poker style” to an admittance that a minimum to them was seen at about R4,500.

Tough stuff….

In a tense meeting with MPs at working committee level, Agri-SA warned of possible job losses in the agricultural sector if a national minimum wage (NMW) were applied across the board without reference to categories or conditions of employment. The parliamentary portfolio committee on labour had invited Agri-SA and trade union affiliates to comment on the issue of a NMW being applied across the board in all spheres of national employment.

Lumka Yengeni, the chair of the portfolio committee, who caused a stir in the last parliament for touring the country for public views on labour brokers, in addition had called for comment from the mining, industry and commerce. The issue of a minimum wage for domestic workers, however, was not tabled at these series of meetings.

Higher wages the result

In the debate that took place, Hans van der Merwe, Executive Director, Agri-SA, told parliamentarians that a minimum wage set at a higher level than at present as part of a national application would result in a considerable number of structural changes within the farming industry to accommodate what would undoubtedly be, as a result, a call for higher wages in many spheres.

He said any “adjustments” would no doubt be characterised by the shedding of jobs, increased mechanisation and the consolidation of farming units, as had happened in the past when farmers throughout the country had to “adjust to maintain their competitiveness and profitability.”He warned government that any such moves “should be carefully considered first” since aside from a number of unintended consequences, the target contained in the NDP to create a million jobs by 2030 would be vastly undermined.

Steadily less

Van der Merwe showed parliamentarians that the number of farming units in 1993 was estimated at 57,980, declining to 45,848 in 2002 and to 39,982 in 2007. The decline in individual units continues, he said, and now some 20% of commercial farms were responsible for 80% of total production. Employment showed a decline between from 1,093,265 in 1993 to 796,806 in 2007 with further declines since, much of it no doubt due to consolidation of farming units.

He said, “Whilst this does not necessarily imply that consolidated and larger farms are more cost-efficient, it does point to the fact that larger farming units have the financial ability to mechanise. This, against a backdrop of rising costs and in particular rising wages makes mechanisation more and more attractive.”

Agri-SA pointed out that all sectors in industry and commerce consisted of many different and contrasting sub-sectors and this was especially true of the agricultural sector. It ranged from small-scale farmers with a few hired workers to those who only hired seasonally; from some with very low skilled workers to some with a major system of mechanisation and highly skilled operators. He was adamant that there could be no “one size fits all” approach to a minimum wage in the agriculture sector.

The trend overall though, Van der Merwe said, was changing to a situation where in the end there would be fewer but more highly skilled workers with quality jobs and with a higher wage and more complementary benefits. He produced statistics from UCT to show historically a picture where, as the agricultural minimum wage had increased, so the employment numbers had immediately gone down.

Big squeeze

Finally, he pointed to the fact that a number of farmers had currently hit hard times as a result of the current global economic situation and local recessive climate insofar as exports and local production was concerned and many were going out of business and with financial problems.

Van der Merwe said that in an overall sense the country was going through difficult times in the agricultural sector and there was consequently a threat to national food security targets associated with the decline.He said that the monthly national minimum wage in Namibia was R888, Botswana R5,470, Zimbabwe R590 and South Africa R2,420 and he commented that the issue of a much higher minimum wage would “increase the possibility of South African farmers investing in neighbouring countries where there were more favourable conditions for farming, particularly where labour issues were concerned.”

He also warned that any substitution of local farming produce would be at the cost of South Africa having to import more agricultural produce.

Diametrically opposed

Raymond Mnguni, Food and Allied Workers Union (FAWU), said the union was insulted by the comparison of national minimum wages between neighbouring countries and South Africa. It made little difference how bad or worse other countries were, he said, but the point was that South African farmers on the whole were paying “poverty wages”.

He indicated that Agri-SA had inferred throughout their presentation that farm workers in this country were a liability rather than an asset. He said FAWU was “tired” of the threat that farmers would mechanise and cut down on the wages bill every time the question of a better life for working families on farms came up.

Neil Coleman of COSATU disputed Agri-SA’s statistics that showed a decline in employment in the agricultural sector of recent, quoting figures from Free Market Foundation. In response, Agri-SA admitted that since 2010 to 2013 there had been a minimal increase in employment but their point was that every time there was an increase in minimum wages, employment figures dropped.

What others are doing

Opposition member, Ian Ollis (DA), said nobody wanted the workers to remain poor and he considered the statistics, in fact, slightly encouraging. Mostly, he added, they showed that Zimbabwe, Mozambique and Namibia badly needed a national minimum wage of some sort very soon.

He said the debate in South Africa was not about the need for a minimum wage but whether there should be a national minimum, what it should be currently and whether it should applied sector by sector according to the economics of that sector.He said opposition members needed to know how and to what degree Agri-SA were involved in skills training and more about any adaption to mechanisation.

There followed lengthy questioning of dubious quality from various smaller agriculture affiliated unions and opposition members, notably the EFF, on the subject of mistreatment of agricultural workers, low wages paid and matters which did not contribute to the issue of a debate on the NMW.

At one stage, chair Yengeni called for questioners to refrain from derogatory comments.Ms Mantashe (ANC) called for a detailed written response on the training and up-skilling of farm workers and some accurate figures to be supplied for committee consumption.

She added that she was disappointed that Agri-SA had omitted the information on the profits made in the sector, particularly comparisons before the 2008 financial crisis and now.Similarly, chair Yengeni called for details of skills training undertaken in the agri-sector. Agri–SA said such figures were available and would be submitted to the parliamentary committee.

Sector views on national minimum wage ….

editorial … Feisty or not, Lumka Yengeni of the parliamentary portfolio committee on labour certainly knows how to advance her career. Whether all her recent parliamentary activity is in line with what Lithuli House wants one never knows but whatever she does seems to attract attention.

The recent hearings on the possibility of a national minimum wage (NMW), which the ANC has stated as a policy imperative, caught most by surprise by the wide ranging topics brought up in debate. Lumka Yengeni seems to have latched on to ANC policy and summonsed many parties to Parliament to give their views on the subject, including BUSA, the Chamber of Mines and Agri-SA. Invited to the debates in many cases were also the appropriate union affiliates to that particular sector

Reports on the consequent debates are with clients and will be posted on our website in a fortnight’s time, since immediacy is the purpose of our reports to them.

Maximum pressure for NMW

The unusual thing about these meetings, as South Africa pivots on the edge of economic direction, is that Parliament should take it upon itself to debate the whole issue of the national minimum wage when the subject also has been scheduled by Deputy President, Cyril Ramaphosa for a national gathering.

Whether this is naiveté on the part of Lumka Yengeni or plain political upstaging only those close to her will know but the experience of the apple farmers in Elgin over labour broking will testify to the fact that she knows the art of political theatre.

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